Gas Prices versus Income

One of the interesting debates in the macro-land is how rising gas prices in the US is going to affect employment growth. Given increasingly difficult job market, a potential employee might have to take a job that requires long commute, but the question then becomes, will he or she take it if she spends disproportionate amount of income on gasoline. Well, that depends on how much of income is spent on gasoline. According to the New York Times cartographers, it depends on where one is based. In the densely populated east and west coasts, spending on gas, even at the current high prices is minimal - less than 5%. So it is unlikely that gas prices will affect people's willingness to take jobs or in econo-speak, the labor force participation rate should not affected by high gas prices.

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The Varying Impact of Gas Prices
New York Times

Gas prices are high throughout the country, but how hard they hit individual families depends on income levels, which vary widely.